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MBAA 523 Problem Set 6

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Question;You;compete with many firms offering similar products (monopolistic competition). An;economic consulting firm has estimated the own-price elasticity for your most;profitable product is -1.50. Your marginal cost is constant at $75 across most;of your production volume capability. What price will maximize profits? Show the computation.Define;the 3 types of price discrimination and explain why 1st degree;discrimination is very difficult to practice. Provide 1 example where a form of;1st degree discrimination is practiced.Complete;and label the diagram showing the numbers of seats sold and price for leisure;and business passengers. Answer the following questions:If;the price of fuel increases modestly, will fares increase?Are;all seats sold? If not, wouldn?t the;airline make more money by selling more seats at a lower price?;Explain;the conditions necessary for a firm to practice 3rd degree price;discrimination and using airline conditions as examples.Wall-Mart;offers to match the price of any competitor. Why is this guarantee not;necessarily a benefit to consumers?

 

Paper#56789 | Written in 18-Jul-2015

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